Nevada Gov. Brian Sandoval signed into law AB 125 (2015) ushering in critical reforms for Nevada’s construction defect laws. The law, which the Nevada Legislature passed this past Friday, Feb. 20, 2015, provides crucial relief for Nevada’s homebuilding industry and signifies the first major reform in 20 years to Nevada’s construction defect laws—the “Notice and Right to Repair” statute commonly referred to as “Chapter 40.” The bill was signed into law less than one month into the 2015 session of the Nevada Legislature.
Chapter 40 was first enacted in 1995 with the intention of providing Nevada homeowners with a prelitigation mechanism to resolve disputes regarding home construction. Although the drafters of the law intended it to be modeled after similar laws nationally, Nevada’s 1995 version included notable deviations from the national standard, including the placement of attorney’s fees and costs as part of the calculation of damages for construction defect lawsuits arising out of the Chapter 40 process. Further efforts to reform the law in 2003 achieved the opposite effect, resulting in the debilitating broadening of the definition of what constitutes a “construction defect.” The ultimate effect of the law was to encourage litigation and conflict, harming both Nevada homeowners and Nevada’s homebuilders.
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